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Crunch Time for Trade

Prepared by: Lee Hudson Teslik
Updated: March 30, 2007

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A bilateral trade agreement with South Korea hangs in the balance as U.S. free trade negotiations arrive at their eleventh hour (CQ) before a March 31 deadline. The deadline is both symbolic and statutory: President Bush’s fast track trade promotion authority (TPA), which allows him to negotiate trade deals independent of Congress, doesn’t expire until June 30. But passing a new trade deal before TPA expires requires the president to put Congress on notice by March 31.

The administration also hopes to pass deals with Panama, Peru, and Colombia, but these pacts pale in economic potential compared to the South Korea agreement. Even if targeted liberalizations are watered down in the process of negotiations, the deal would still be the biggest U.S. pact since the 1994 North American Free Trade Agreement and South Korea’s most extensive trade deal ever. As the final days of negotiations neared, analysts expressed optimism that the passage of a deal was increasingly likely (Reuters) as the two sides pushed through obstacles on protected goods including rice and automobiles. But mid-Friday, the U.S. tone turned darker and officials said talks were "not going well" (FT).

The deal has its enemies. It sparked protests (Yonhap) this week in Seoul, and three South Korean lawmakers held a highly publicized hunger strike. The negotiations also drew criticism from some U.S. companies, including Chevron, which seeks tougher investor protections (MarketWatch).

The proposed deals with Panama, Colombia, and Peru, have already been negotiated but have not yet received congressional approval. Reuters notes that a number of congressional Democrats are prickly about elements of these agreements—most specifically that they do not safeguard U.S. labor rights.

Congress worked this week to narrow partisan differences through what the U.S. Trade Representative Susan Schwab praised as a “good faith dialogue” (FT). Congressional Democrats on March 28 unveiled a proposal saying they would pass trade deals that include environmental and labor protections and allow trading partners to make generic copies (IHT) of patented U.S. pharmaceuticals. Both labor groups and the Bush administration tacitly praised elements of the proposal.

However refreshing the cooperative effort to pass a deal might be, experts say the backdrop of President Bush losing his trade promotion authority casts an uncertain shadow on the future of U.S. trade negotiations. As this briefing by the Business Roundtable explains, TPA is a critical tool because it bypasses the bureaucratic quagmire of congressional markups and allows the President to present trade agreements to Congress in final form, for a yes-or-no vote. Without this authority, experts say, multilateral deals like the ones targeted by the Doha round of trade negotiations could become practically impossible to pass.

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